Fed officials agreed they would only hike interest rates if progress in controlling inflation wavered, reiterating recent comments by policymakers that left the door open for more tightening even as markets have moved to price in cuts from early 2024

The dollar index held near 2-1/2-month lows after minutes of the Fed’s last meeting did little to shift market expectations that its monetary tightening cycle was over.

The Fed minutes showed the central bank would proceed “carefully” and that “all participants judged it appropriate to maintain” the current rate setting.

Fed officials agreed they would only hike interest rates if headway in controlling inflation wavered, restating recent comments by policymakers that left the door open for more tightening even as markets have moved to price in cuts from early 2024.

The release of the FOMC (Federal Open Market Committee) November minute did little to sway the view that the Federal Reserve has reached their terminal rate, said Matt Simpson, senior market analyst at City Index.

Markets are all but certain that the Federal Reserve will hold rates at their December meeting, while pricing in around a 30 per cent probability of a rate cut as early as March, as per CME’s FedWatch Tool.

The dollar index, which measures the currency against rival currencies, was flat at 103.58, around levels last seen in early September but off an overnight session low of 103.17.

The euro last stood at $1.0912 after increasing to its highest against the dollar since mid-August to $1.0966 on Tuesday.

Sterling was mostly flat at $1.2534, near a two-month high of $1.2554 hit overnight.

“We are seeing signs that the dollar bearish move is running out of steam” and could be “due to bounce,” Simpson said, adding that the dollar has a tendency to weaken and then strengthen around the time of the U.S. Thanksgiving holiday, which happens on Thursday.